How common are unequal co-founders? Is this a pro or a con to the long term success of the startup?

Elad posted an excellent article pointing out that an equal division of equity can actually be harmful to a startup. Why?

“Another interesting way of thinking about this is reversion to the mean. Startups need to be outliers in many ways to be an outlying success, one such vector where I think this helps is in product decisions. Any time you involve multiple stakeholders in these decisions (whether it’s cofounders/customers/anyone else) you risk having your product revert to the mean (i.e. no one particularly hates it but no one loves it either). Having a product dictator is probably actually optimal for chasing outlying success.”

I agree that an unequal distribution of equity probably gives a startup a better chance of long-term success.

“Co-founder conflicts tend to arise when there is a lack of clarity on decision making, product vision, and overlapping founder roles.”

I think in the early days an equal co-founder split can work fine because it is a small group, but as the business grows equal equity and equal power can bog down decision making. It can also cause problems long-term as the skills needed to boot up a company are very different from those needed to run a medium to large company. And, I think it is very rare for any person to have the self-analysis to pro-actively see it is time they take a step back or out. Usually what happens is it boils for 1 to 3 years and then blows up, causing substantial problems in the company.

I highly recommend reading the full article here. And, the comments on Hacker News are quite valuable too.